C-52/83
ECLI:EU:C:1983:328
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J U D G M E N T OF T H E C O U R T 15 NOVEMBER 1983 '
Commission of the European Communities v French Republic
(State aids — Compliance by a State with a Commission decision)
Case 52/83
Objection of illegality — Action brought against a Member State for failure to fulfil its obligations by failing to comply with a decision prohibiting aid — Expiry of the limitation period for an action for a declaration that it is void — Inadmissibility of the objection of illegality raised with regard to the decision (EEC Treaty,firstand second subparagraphs ofArt. 93 (2) and third paragraph of Art. 173)
To allow a Member State to which a period laid down in the third paragraph decision adopted under the first sub- of Article 173 of the Treaty, would paragraph of Article 83 (2) has been be impossible to reconcile with the addressed a further opportunity to call in principles governing the legal remedies question the validity of that decision on established by the Treaty and would the occasion of an application referred to jeopardize the stability of that system in the second subparagraph of that and the principle of legal certainty upon article, in spite of the expiry of the which it is based.
In Case 52/83
COMMISSION OF THE EUROPEAN COMMUNITIES, represented by Marie-José Jonczy, a member of its Legal Department, acting as Agent, with an address for service in Luxembourg at the office of Oreste Montako, a member of its Legal Department, Jean Monnet Building, Kirchberg,
applicant, v FRENCH REPUBLIC, represented by G. Guillaume, Director of Legal Affairs at the Ministry of External Affairs, acting as Agent, assisted by G. Boivineau, Deputy Principal Secretary for Foreign Affairs, acting as Assistant Agent, with an address for service in Luxembourg at its Embassy, 2 Rue Bertholet, defendant, 1 — Language of the Case: French.
JUDGMENT OF 15. 11. 1983 — CASE 52/83
APPLICATION for a declaration that the French Republic, by not complying with the Commission Decision of 12 January 1983 on an aid scheme in favour of the textile and clothing industry in France, has failed to fulfil its obligations under the EEC Treaty,
THE COURT
composed of: J. Mertens de Wilmars, President, T. Koopmans, K. Bahlmann and Y. Galmot (Presidents of Chambers), P. Pescatore, Lord Mackenzie Stuart, A. O'Keeffe, G. Bosco, O. Due, U. Everling and C. Kakouns, Judges,
Advocate General: G. F. Mancini Registrar: P. Heim
gives the following
JUDGMENT
Facts and Issues
The facts of the case, the course of the 93 (3) of the EEC Treaty,, notified the procedure and the conclusions, sub- Commission of a draft order for the missions and arguments of the parties establishment of an aid scheme in favour may be summarized as follows: of the textile and clothing industry under which the State was to take over part of the social security contributions payable by employers in the industry. The Facts and written procedure scheme was established by Order No 82-204 of 1 March 1982 and its 1. On 19 February 1982, the French implementing measures, announced by Government, in conformity with Article the French Government at the time of
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notification of the draft order, were be checked. No contract may be notified to the Commission on 16 April concluded after 31 December 1982." 1982 and put into effect on the same day by Decree No 82-340.
4. Finally Article 5 (3) of that order provides that: 2. The taking over by the State of part of the social security contributions amounted to 10 % of the total amount "The contract may be renewed, after of remuneration which, subject to the amendment where necessary, for a ceiling, served as the basis for calculation further period of 12 months. The total of the compulsory social security contri- duration of the contract or contracts butions payable by employers in the may not exceed 24 months for any one textile and clothing industry, where the undertaking." undertakings in question undertook to maintain the level of employment and to attain a certain minimum level of investment. It is increased to 12 % where 5. The Commission, taking the view the undertaking concerned also commits that such a scheme constituted an aid itself to create additional employment. scheme incompatible with the common Undertakings whose difficulties are market within the meaning of Article 92 capable of affecting the economic and of the Treaty, called upon the French social balance of a region may obtain a Government to submit its observations reduction of social security charges equal and then on 12 January 1983 adopted to 8 %, without being bound by the Decision No 83/245/EEC on an aid same conditions relating to employment scheme in favour of the textile and clothing industry in France (Official and investment, by simply presenting a Journal, L 137, 26. 5. 1983, p. 24). plan for modernization and adaptation of the undertaking and for protecting employment, subject to approval by the competent administrative authority. 6. Articles 1 and 2 of that decision are worded as follows:
3. Furthermore, Article 5 (1) of the said "Anicie 1 Order No 82-204 provides that:
The French Republic shall, within one "The taking over shall be subject, regard month of notification of this decision, being had to the position of the under- abolish the aid scheme in favour of the taking, to the conclusion between the textile and clothing industry under which State and the employer of a contract of a the State takes over responsibility for duration of 12 months giving in p a n of the social security contributions particular details of the commitments payable by employers in the industry, entered into by the employer pursuant to introduced by Order No 204 of 1 March the provisions of this order, the date 1982, the implementing rules for which from which the taking over has effect, were laid down by Decree No 82-340 of which must be later than the date on 16 April 1982. which the contract is concluded, and the means by which the employer's Furthermore, the French Republic shall compliance with his commitments may cease to grant aid under the scheme in
JUDGMENT OF 15. 11. 1983 — CASE 52/83
question from the date of notification of working hours with a view to increasing this decision. employment will be examined.
Article 2 The French Government reiterates its The French Republic shall notify the willingness to carry out in conjunction Commission of the provisions which it with the Commission of the European has adopted to comply with this decision Communities a complete study of the no later than the expiry of the period difficulties of the textile industry in fixed in the first paragraph of Article 1." Europe and of means of dealing with it."
The final recital in the preamble to the 9. The Commission, taking the view decision reads as follows: that the French Government had refused to comply with its decision, by an application lodged on 30 March 1983, ". . . the French aid scheme for the brought this action pursuant to the textile and clothing industry . . . is second subparagraph of Article 93 (2) of incompatible with the common market the Treaty. The French Government under Article 92 of the EEC Treaty and submitted its defence on 11 May 1983. must accordingly be abolished. The French Government must not therefore conclude any contract as provided for in 10. By letter of 16 June 1983, the the above-mentioned provisions and Commission informed the Court that it must terminate any contracts already waived its right to submit a reply. The concluded with firms in breach of Article Commission gave the following reasons 93 (3) of the EEC Treaty." for its waiver. On 5 May 1983, the French Government notified it of a draft decree whose object was to define the conditions governing the renewal of the 7. The decision was notified to the contracts concluded between the State French Republic on 21 January 1983. and the employers in the textile and clothing industry in the context of the aid scheme established by Order No 204 8. On 23 February 1983 the French of 1 March 1982. As the Commission Government issued a communiqué on was of the view that the project was not the aid scheme concerned. In that "of such a nature as to make the aid communiqué, which was sent to the scheme concerned compatible with the Commission on the day it was published, common market within the terms of the Government declares, inter alia: Article 92 of the EEC Treaty", it decided on 7 June 1983 to initiate with regard to the draft the procedure laid "The 'employment investment' contract down in Article 93 (2). That decision procedure will be reimplemented, was notified to the French Republic by degressively, for a second and final year. letter of 15 June 1983. However the It will be amended in order to achieve a French Government put the planned better proportion between the aid measures into effect and published in the granted and the efforts made by under- Official Journal of the French Republic takings to invest. Moreover, any means of 8 June 1983 Decree No 83/458 of 7 capable of encouraging a reduction in June 1983, on the renewal of the
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contract provided for by Order No January 1983 requires the French 82-204 of 1 March 1982. Republic, on the one hand, to abolish within one month, that is to say by 21 11. Upon hearing the report of the February 1983 at the latest, the aid Judge-Rapporteur, the Court decided to scheme established and, on the other open the oral procedure without any hand, with effect from 21 January 1983 preparatory investigation. However, the not to grant any further aid pursuant to Court invited the French Government to the scheme in question, which was, explain at the hearing to what extent moreover, regard being had to the subsidies under the aid scheme in failure of the French Government to question had been paid after 21 January observe Article 93 (3) of the Treaty, void 1983 and whether and to what extent if by reason of illegality. The Commission any the French authorities had effected adds that pursuant to Article 189 of the renewals of contracts previously Treaty, decisions are binding in their concluded. entirety upon those to whom they are addressed.
However, the communiqué of 23 II — C o n c l u s i o n s of t h e p a r t i e s February 1983 to which reference has already been made and which announced the renewal for a second year of the aid The Commission claims that the Court should: scheme at issue, could only be interpreted as a refusal of the 1. Declare that the French Republic, by government to comply with the not complying within the period pre- Commission's decision. scribed with the Commission Decision of 12 January 1983 on an aid scheme The Commission concludes that there is in favour of the textile and clothing no doubt that the French Government industry in France, has failed to has not fulfilled its obligations under the comply with its obligations under the first subparagraph of Article 93 (2) of the Treaty; Treaty.
2. Order the French Republic to pay the 2. In its defence, the French costs. Government states that it has fully complied with the Commission's decision The Government of the French Republic in so far as it is entitled to interpret it in claims that the Court should: the light of Community law.
1. Dismiss the application as unfounded; 2.1. Thus, if the Commission's in- terpretation — or rather its intention — 2. Order the applicant to pay the costs. is to be accepted the French Government would have been required, inter alia, unilaterally to break contracts concluded Ill — Submissions and argu- before the decision came into effect. m e n t s of the p a r t i e s d u r i n g Such a requirement would however be t h e c o u r s e of the w r i t t e n contrary to Community law inasmuch as procedure it takes no account of the principle of the protection of legitimate expectation.
1. In its application the Commission The French Government on the other emphasizes that the decision of 12 hand interprets the decision by reference
JUDGMENT OF 15. 11. 1983 — CASE 52/83
to the judgment of the Court of 12 July December 1982, that is to say a date 1973 (Case 70/72 Commission v more than three weeks prior to the Germany [1973] ECR 813). In that notification of the decision. Therefore, judgment, the Court held that the with regard to that category of contract, Federal Republic of Germany was the Commission's decision is inap- lawfully entitled to continue to grant plicable. investment subsidies, even after the Commission's decision, "to take account of the legitimate interests of investors". The government concludes therefrom that it is clear that the date which must be taken into account for the purpose of 2.2 With regard to the renewal of the abolition or cessation of an aid, in contacts already concluded, the French relation to the date on which a Government emphasizes that Article 5 Commission decision takes effect, is not (3) of Order No 82-204 clearly means the date on which that aid is actually that a contract is not renewed auto- received in accountancy terms (receipt or matically or in identical terms, but must allocation) by the recipient, but either undergo amendments and, for those the date of the administrative measure reasons, any renewal cannot occur giving rise to the aid or, where there is a immediately on expiry of the contract. contractual commitment, the date on The French Government interprets the which the future recipient of the aid Commission's decision as prohibiting it began to fulfil his undertakings precisely from renewing contracts made in 1982, with a view to and for the purpose of as the extent to which amendments to be receiving the aid which the national made to them within the actual terms of legislation or rules authorize him to Order No 82-204 do not contribute to claim. making the aid scheme compatible with Article 92 of the Treaty. It is in that light that the communiqué óf 23 February 1983, announcing that the procedure for the contracts would be renewed, after amendment, for a second and final year It follows, according to the French and which suggested consultation with Government, that although the decision the Commission on that subject, must in question may lawfully prohibit it from be understood. The Commission was concluding other contracts after the date therefore wrong to take the view that the on which it takes effect, it can in no communique amounted to a refusal to circumstances, as the Commission has apply its decision. claimed, require him to abrogate contracts already concluded.
2.3 In those circumstances, since the Consequently, contracts concluded decision of 12 January 1983 could not pursuant to Article 5 (1) of Order N o apply to contracts concluded before 31 82-204 of 1 March 1982, aforesaid, are December 1982 and since no contract not affected by the Commission's was either concluded or renewed after decision because by virtue of its own the date on which the decision took internal legislation, the government effect, the French Government repeats could not conclude them until 31 that it has fully conformed, with it.
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IV — Oral procedure 1983 and that the French authorities had renewed contracts already concluded. The government added that 3 015 At the sitting on 13 September 1983 the contracts had been concluded between French Government, represented by the date of entry into force of the G. Boivineau, and the Commission, scheme in question and 31 December represented by M.-J. Jonczy, presented 1982, and that it estimated that some oral argument. 2 400 contracts had been renewed for 1983. The French Government also explained that subsidies pursuant to the aid scheme The Advocate General delivered his in question were paid after 21 January opinion at the sitting on 6 October 1983.
Decision
1 By application lodged at the Court Registry on 30 March 1983, the Commission of the European Communities brought an action pursuant to the second subparagraph of Article 93 (2) of the EEC Treaty for a declaration that the French Republic, by not complying within the period prescribed with Commission Decision N o 82/245/EEC of 12 January 1983 on an aid scheme in favour of the textile and clothing industry in France (Official Journal, L 137, 26. 5. 1983, p. 24), had failed to fulfil an obligation under the Treaty.
2 It appears from the file that, on 19 February 1982, the French Government notified the Commission, in pursuance of Article 93 (3) of the Treaty, of a draft order for the establishment of an aid scheme in favour of the textile and clothing industry under which the State was to take over part of the social security contributions payable by employers in the industry. That aid scheme was later established by Order No 82-204 of 1 March 1982, published in Official Journal of the French Republic N o 51 of 2 March 1982. Measures for its implementation were notified to the Commission on 16 April 1982 and brought into force by Decree No 82-340 of the same date, published in the Official Journal of the French Republic N o 90 of 17 April 1982.
JUDGMENT OF 15. 11. 1983 — CASE 52/83
3 According to Article 5 of the aforementioned Order N o 82-204, the taking over by the State of part of the social security contribution is to be subject to the conclusion between the State and the employer of a contract for a period of 12 months specifying the proportion of contributions taken over and the commitments entered into by the employer with regard to the maintenance or creation of employment and attaining a certain level of investment. The article also provides that no contract may be concluded after 31 December 1982, but contracts concluded before that date may be renewed for a further period of 12 months.
4 The Commission gave the French Government formal notice to submit its observations and subsequently, pursuant to the first subparagraph of Article 93 (2) of the Treaty took the aformentioned decision which led to this action.
5 Article 1 of that decision provides :
"The French Republic shall, within one month of notification of this decision, abolish the aid scheme in favour of the textile and clothing industry under which the State takes over responsibility for part of the social security contributions payable by employers in the industry, introduced by Order N o 204 of 1 March 1982, the implementing rules for which were laid down by Decree N o 82-340 of 16 April 1982.
Furthermore, the French Republic shall cease to grant aid under the scheme in question from the date of notification of this decision.
6 The decision was notified to the French Republic on 21 January 1983 and the French Government did not bring an action within the period prescribed by the third paragraph of Article 173 of the Treaty for a declaration that it was void.
7 On 23 February 1983, the French Government sent to the Commission a. communiqué stating that the procedure for "employment-investment" contracts would be re-implemented, degressively, for a second and final year. The Commission took the view that the issue of the communiqué was
COMMISSION v FRANCE
tantamount to a refusal by the French Government to comply with its decision and accordingly brought this action.
s The French Government maintains that it has fully complied with the Commission's decision. It recalls that the decision was adopted after the period prescribed for the conclusion of contracts had expired. Consequently, no contract was concluded after the notification of the decision. The government admits, on the other hand, that the French authorities continued to fulfil undertakings into which they had entered by the contracts already concluded. However, it is of the view that it was entitled to interpret the Commission's decision in a manner which would permit it to observe the principle of the protection of legitimate expectation, which the French auth- orities would have breached if they had unilaterally abrogated contracts already concluded. The Court itself, it is claimed, recognized the existence of that principle in similar circumstances in its judgment of 12 July 1973 (in Case 70/72 Commissions Germany [1973] ECR 813).
9 It must be observed that, in contrast to the decision which led to Case 70/72, the Commission's decision of 12 January 1983 indicated clearly and un- equivocally the obligations thereby imposed on the French Republic. It required the latter, from the date of notification, no longer to grant any aid under the scheme in question and, within a period of one month, to abolish the scheme. However, it is common ground that the French Republic continued to pay the aid for which the scheme provided to any employer who had made a contract and that the French Government took no steps to abolish the aid scheme within the period prescribed by the decision.
io Moreover, the French Government's argument with regard to the principle of the protection of legitimate expectation does not relate to the interpret- ation of the decision, but constitutes a contention relating to its validity, which could only have been raised in support of an application for a declaration that it was void. In fact, as the Court has already stressed in its judgment of 12 October 1978 (Case 156/77 Commission v Belgium, [1978]
JUDGMENT OF 15. 11. 1983 — CASE 52/83
ECR 1881), to allow a Member State to which a decision adopted under the first subparagraph of Article 93 (2) has been addressed a further opportunity to call in question the validity of that decision on the occasion of an application referred to in the second subparagraph of that article, in spite of the expiry of the period laid down in the third paragraph of Article 173 of the Treaty, would be impossible to reconcile with the principles governing the legal remedies established by the Treaty and would jeopardize the stability of that system and the principle of legal certainty upon which it is based.
1 1 In those circumstances, it must be declared that the Member State in question has failed to fulfil its obligations, as contended in the Commission's conclusions.
Costs
i2 Under Article 69 (2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs. Since the defendant has failed in its submissions it must be ordered to pay the costs.
On those grounds,
THE COURT
hereby:
1. Declares that the French Republic, by not complying within the period prescribed with Commission Decision No 83/245 of 12 January 1983 on an aid scheme in favour of the textile and clothing industry in France, has failed to fulfil one of its obligations under the Treaty;
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2. Orders the French Republic to pay the costs.
M e r t e n s de Wilmars Koopmans Bahlmann Galmot Pescatore M a c k e n z i e Stuart O'Keeffe Bosco Due Everling Kakouris
Delivered in open court in L u x e m b o u r g on 15 N o v e m b e r 1983.
P. Heim J. M e r t e n s d e Wilmars Registrar President
OPINION OF MR ADVOCATE GENERAL MANCINI DELIVERED ON 26 OCTOBER 1983 '
Mr President, have referred and on 1 March brought it Members of the Court, into force (Order No 204, Official Journal of the French Republic of 2 1. This case is a direct action brought March 1982) without waiting for the by the Commission, pursuant to the Commission to make its own obser- second subparagraph of Article 93 (2) of vations under Article 93 (3) of the EEC the EEC Treaty, against the French Treaty. The regulation provided for the Republic which is charged with having State to take over temporarily part of the failed to comply with a Commission costs arising from social insurance. To decision of 12 January 1983 relating to a obtain the relief, however, the under- system of state aids in favour of textile taking concerned had to conclude with and clothing undertakings. the State before 31 December 1982 an agreement valid for 12 months giving To summarize the facts — on 19 details of the duties which it assumed February 1982 the French Government with regard to maintaining the level of notified the Commission of a draft regu- employment and to the making of new lation establishing the system to which I investments. It also provided for the
1 — Translated from ihe kalian.